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F-16 Agile Falcon Multinational Fighter Program

In 1975, the U.S. Air Force entered into a foreign military sales (FMS) arrangement with the European Participating Governments (EPG) of Belgium, Denmark, the Netherlands, and Norway to procure and produce F-16 aircraft under the cooperative program known as the F-16 Multinational Fighter Program (MNFP). Under the program, the U.S. Air Force procured 650 F-16 aircraft and the EPG procured 348 F-16 aircraft. Governed by a June 10, 1975, memorandum of understanding, the F-16 MNFP involves a cost-sharing, pricing, and coproducing arrangement between the U.S. Air Force and the EPG.

The memorandum of understanding provides the framework for implementing the Letter of Offer and Acceptance (LOA) signed by the U.S. Air Force and the EPG. The F-16 MNFP for the EPG nations consists of four LOA cases, one each for Belgium, Denmark, the Netherlands, and Norway. An LOA is a contract between the U.S. Government and a foreign government, whereby the foreign government agrees to allow U.S. Government representatives to act on its behalf to procure defense articles and services. The LOA provides the basic information and authority for an FMS case and lists the articles and services, estimated costs, and the terms and conditions of the sale.

The governments agreed on a not-to-exceed cost of 12.5 million dollars. The cost sharing arrangements for this phase are based on the number of "F-16A/B aircraft purchased minus attrition". Following are the cost share percentages: U.S. 60.24%, Belgium 12.04%/o, Denmark 5.31%, The Netherlands 16.68%., and Norway 5.73%.

The F-16 was built under an unusual agreement creating a consortium between the United States and four NATO countries: Belgium, Denmark, the Netherlands and Norway. These countries jointly produced with the United States an initial 348 F-16s for their air forces. Final airframe assembly lines were located in Belgium and the Netherlands. The consortium's F-16s are assembled from components manufactured in all five countries. Belgium also provides final assembly of the F100 engine used in the European F-16s. Recently, Portugal joined the consortium. The long-term benefits of this program will be technology transfer among the nations producing the F-16, and a common-use aircraft for NATO nations. This program increases the supply and availability of repair parts in Europe and improves the F-16's combat readiness.

The F-16 aircraft MLU Program was a $2 billion upgrade to develop, produce, and install 301 avionics kits for the improvement of F-16 aircraft purchased by Belgium, Denmark, Norway, and the Netherlands. The F-16 MLU includes a modular mission computer, the advanced APG-66 radar, an enhanced cockpit, and the advanced integrated friend or foe system.

The four countries originally purchased the F-16 aircraft in 1976. Those purchases were consolidated with a larger Air Force purchase under the F-16 Multinational Fighter Program. A total of 998 F-16 aircraft were produced under the Multinational Fighter Program coproduction agreement. The European participating governments bought 348 aircraft, and the U.S. Air Force bought 650 aircraft.

The U.S. Government participated in the development phase of the F-16 aircraft MLU Program, but withdrew in November 1992 from the production phase. Lockheed and the European participating industries are scheduled to produce a total of 301 kits for the European participating governments: 48 for Belgium, 61 for Denmark, 56 for Norway, and 136 for the Netherlands. Because of cost considerations, all F-16 aircraft owned by the four countries will not be upgraded.

On May 27, 1991, an Industrial Cooperative Agreement was signed for the development and production of the F-16 aircraft MLU. The U.S. Government has no obligation under this agreement. Lockheed agreed to place a minimum of 58 percent of the dollar value of the F-16 aircraft MLU development and production with European participating industries, subject to certain provisions. The agreement specified that Lockheed was to select subcontractors on a fully competitive basis. Central to the agreement was the provision that the European participating industries must sell F-16 aircraft MLU items and services at prices that do not exceed the prices of the same items and services offered to Lockheed by U.S. domestic companies.

The European participating industries' bids were based on smaller production quantities than the quantities used by U.S. domestic contractors. Foreign subcontractors could bid only on the proposed quantities that the European participating governments planned to purchase. U.S. contractors bid on F-16 aircraft MLU kits that were to be installed not only on F-16 aircraft of European participating governments, but also on other F-16 aircraft expected to be sold through the DoD foreign military sales program to other foreign countries, and on Lockheed sales to the US Air Force.

European participating industries competed equally for subcontracts on the F-16 Mid-Life Update Program. European participating industries were awarded a total of $303.3 million of the $380 million available for foreign manufacture on the F-16 Mid-Life Update Program. Contractors complied with the Federal Acquisition Regulation and the Defense Federal Acquisition Supplement in the solicitation, source selection, and award process for subcontracts on the F-16 aircraft Mid-Life Update Program.

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Page last modified: 04-11-2015 19:07:39 ZULU